In this episode of The Acquirers Podcast, Tobias chats with William Green, author of Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life. During the interview William provided some great insights into:
- Great Investors Avoid Catastrophic Loss
- Bill Miller: Stoic Investing Comeback
- Sir John Templeton: Mastering The Inner Game
- Jean-Marie Eveillard: Avoiding The 3 Great Financial Catastrophies
- Arnold Van Den Berg: Incredible Investor, Extraordinary Human Being
- Tom Gayner: Remarkably Understated
- Ed Thorp: Stacking The Odds In Your Favor
- Francois Rochon: The Best Investors Lack The Tribal Gene
- Laura Garrett: Frontier Warrior
- Great Investing Requires Great Sacrifice
- Good Interviewers Are Not Judgmental
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Tobias: Hi, I’m Tobias Carlisle. This is The Acquirers Podcast. My special guest today is William Green. He’s written a new book called Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life. He’s interviewed many of the greatest investors of all time. He’s talked to them about how to succeed in the markets and in life. It’s a fascinating discussion that is coming up just after this.[intro]
William: I had this terrible moment when I was a child, where I was at the school called Collette Court in London, and I’ve dived into a pool, and I was swimming like crazy, and I wasn’t a very elegant swimmer, to say the least, that’s flattering to myself. After about a minute, I suddenly realized that nobody else was swimming. It was a false start. The entire class was just watching me moronically splashing around in the pool. I think this has been the terror, ever since has been I’m the one quietly splashing in the pool, and everyone else is realizing and is watching me making a fool of myself. What I was saying to you before is, I think, to some degree, that paranoia has protected me, because I’m always like, “Oh, God, what am I about to do that’s going to make a tremendous fool of myself?”
Tobias: You’ve got to keep on working. As a swimmer, I have done that myself many times-
William: Oh, you have?
Tobias: -and seen that happen many times. I wouldn’t be too worried about it.
William: That’s funny. I’m such a bad swimmer, and I’ve swung so little, but it hadn’t occurred to me that that was a common thing.
Tobias: Yeah, it happens all the time.
William: I’m like, “No, I’m the only person this has ever happened to.”
Tobias: I’ve seen in 50-meter races, particularly with freestyle, where you could throw your laundry in with the swimmers and have your laundry done the way down. You’ve don’t breathe, you don’t put your head up above the water, you just swim all the way to the wall. I’ve had many races and seen many races where I’ve got to the wall and realized it was a false start. Sometimes, they have a rope that they drop halfway down, but you can easily go under the rope or they don’t get there in time. It happens regularly.
William: Oh, let’s get– you’ve comforted me after 40 years of misery about this thing. I finally can put that to rest. Thank you.
Tobias: But you’d have never had the career that you had without carrying that around and driving you to get better and better.
William: It’s true. I’m so deeply scarred by it, probably I’ll never be able to get rid of it anyway. Yeah, it’s part of my wiring at this point.
Tobias: Where are you based?
William: I’m in Irvington, New York, which is about 45 minutes north of New York City, and it’s beautiful. Part of the problem is, I’m in this mostly glass house, and so I have a two-year-old dog who sees deer walking outside and mailman and just goes nuts. If every few minutes, you hear, my dog has got loose and is barking at someone. You’ll know what it is, but hopefully she’s under control downstairs.
Tobias: I have a three-year old child who likes rabbits, and we have lots of rabbits in the backyard. You might hear the same thing. He might run behind me to watch the rabbits in a moment.
William: That’s sweet. Where are you?
Tobias: I’m in Los Angeles.
William: Oh, great.
Tobias: We’re in this little surfing village a little bit out of Los Angeles proper. The backyard is like rabbits and groundhogs, which I thought– being Australian, I’ve never seen a groundhog before, but the first time I saw that it and I thought that’s really cool, and now they’re shredded the backyard. I realized why people don’t like them.
Tobias: Swish cheese the backyard.
William: I still I’m happy for the deer to chew the crap out of our yard. I feel like, “It’s just fine.”
Tobias: Yeah, it’s fun. I’d much rather live among nature.
Avoiding Catastrophic Loss
Tobias: You’ve written a new book, Richer, Wiser, Happier, it’s just the cover there for folks who are watching the YouTube channel, How the World’s Greatest Investors Win in Markets and Life. I love this idea. The book is not about so much the markets, it’s about advice that they provide outside of their investing. Why do you think that they have some perspective with sharing outside of the markets?
William: Well, I think one of the things that’s so distinctive about the greatest investors is that they naturally think in terms of odds, and stacking the odds in their favor. I think once you start doing that in markets, you probably apply the same way of thinking in every area of life. I think they become this extraordinary filter for how to succeed professionally, personally, which is a counterintuitive idea, because we think about billionaires who’s having the world’s most dysfunctional lives, which is clearly true in many cases. This kind of elite group of worldly wise investors that I’ve been focused on, are actually remarkable thinkers about how to stack the odds in their favor, in not just markets, but in life.
If you think, for example, about someone like Charlie Munger, for example, who I interviewed in your neck of the woods in LA. He is someone, who’s massively, massively intelligent, and yet is utterly focused on simply reducing what he calls standard stupidities. That’s an extraordinarily powerful and robust idea that actually just applies to every area of life for, well, think of someone like Ed Thorp, who I describe as probably the greatest game player in the history of investing. He is someone who is obsessed with only playing games that he can win, with surviving catastrophe, making sure that you don’t blow yourself up and knock yourself out of the game. That’s something that applies just as well to a period like COVID, where you just want to survive and get through this intact as it does to investing. For me, there’s always this really fascinating intersection between how you survive and prosper amid the uncertainty and complexity of markets, and how you survive and prosper amid the uncertainty and complexity of life, but not that different.
Tobias: I think that you draw an interesting idea from both Munger and from Thorp in the sense that they are both focused on avoiding catastrophic loss, or avoiding stupidity, avoiding mistakes. Is that something that you found– Was that a theme that you found recurring throughout discussions with these folks?
Ed Thorp: Stacking The Odds In Your Favor
William: I think it’s enormously important. It’s enormously important. One of the most fascinating conversations that I had was with Ed Thorp when I was calling to fact check with him, and I’d had something like a three-hour breakfast with him a couple of years ago in New York City, talking about how we stack the odds in all of these areas of life, whether it’s beating the casino at blackjack, or beating the casino at roulette by making the first handheld– the first wearable computer, so you could figure out the speed of the rotator wheel, and the ball as it went around the roulette wheel.
Then a few months ago, I called him again, because I was fact checking, and I wanted to update my book. I said, “Well, how have you been dealing with COVID? How did you think about it?” There was a kind of pause, and he said, “Well, thank you for asking.” It suddenly timed out. He unloaded this amazing explanation of how it was that he heard approach to this that was so fantastically consistent with everything else he’s done, and with this obsession with avoiding catastrophe.
He told me that he had basically back in, I think, about January or February of 2020, when nobody in the US was really that concerned, we all just thought this was a problem in China. We were all, for the most part pretty lax about even reading about it and following it. He starts to analyze all of the data from Wuhan, pays particular attention to unexplained deaths. Starts to figure out based on that data, and also on inferences that he made from the 1918 to 1919 Spanish flu, which killed his grandfather, starts to figure out what he regards as the true fatality rate, and then decides, “Okay.” He calls his entire family together, and he says, “We’re going to lose somewhere between 200,000 and 500,000 people in the US over the next 12 months.” This is before a single person had been recorded as dying in the US. He puts himself in isolation. A month before all of the shelves get cleared of things like detergent, and toilet paper and stuff, he’s out there actually buying things like masks, while they’re all in great supply.
This is a really quintessential piece of investor rationality. He’s looking at the data totally objectively, totally impartially. He’s questioning the authorities. He’s not saying, “Well, we’ve been reassured that it’s all right.” He knows that the politicians are liars and are going to distort everything. He knows that the data is going to be really murky. He’s just playing the odds, and he’s putting the odds in his favor. He said, “There’s no point being scared, but I figured out my own likelihood of dying.” He said, “If I get COVID, given the fact that I’m an 86-year-old,” I think he was then, “With no comorbidities and I’m very fit, and I’m very careful. I probably have a 2% to 4% chance of dying.” He’s like, “That doesn’t sound that terrible bet, but actually, those are pretty high odds, and I want to survive. I want to survive this period.”
Even when he saw his kids, for example, his adult kids, they would meet outside distanced and with masks, and he basically then was only seeing his wife and so he’s holed up in this idyllic home overlooking the beach in California, because he just realized, “I need to calculate the odds for myself, look at the data for myself, and then basically stack the odds in my favor by avoiding the possibility of catastrophe, because I have to stay in the game.” Think about the application of that to investing.
You think about someone like this guy [unintelligible [00:10:17], who just blew himself up. You just have to stay in the game. The worst thing that you can do is blow yourself up however smart and successful you are. There’s someone like [unintelligible [00:10:27] who’s obviously way more intelligent than I am, way more successful than I am, but he missed this cardinal rule. I see this running through the lives of all of the best investors, this idea of putting survival and avoidance of catastrophe right at the top of your list of things to do.
Tobias: When you’re conducting interviews like this, how do you do it? Do you have a meal with them and record the conversation of the course of a meal? Is that how they’re conducted?
William: It’s different with every person. In this book, I’m kind of nuts and obsessive. I literally, I went to India for five days with Mohnish Pabrai. I’m travelling across India, I’m literally sleeping in a bunk bed with Mohnish on an all-night train from, I think, it was Kota to Mumbai. That’s really intimate. You’re really getting into that life. We’re sitting in this car veering madly across the highway, while I’m writing notes and recording and we’re in between trucks, and I’m closing my eyes in horror. He’s just sitting there totally calm in the presence of risk, but he’s like, “Yeah, but the accident rate here is very high.” I’m recording him while I’m doing that, then I’m in a school with him that’s funded by the Dakshana Foundation, which is his philanthropic foundation.
I’m seeing how he’s interacting with these kids who is lifting out of poverty in rural India. Then, I’m with him at the Omaha meeting, a couple of years. Then I’m going out to his favorite Korean restaurant in Irvine, California, while he’s sitting there eating his favorite spicy food. What I’m trying to do is get this deep intimacy, where I’m actually seeing how people are operating in every area of their life.
Tom Gayner: Remarkably Understated
That would be an extreme case, but with someone like Tom Gayner, the co-CEO of Markel, I spent the best part of two days with him in Virginia. I went to his home for dinner. Someone like Tom, he’s a remarkably understated and modest co-CEO of a major Fortune 500 company, and I’m literally leaving his office after a full day interviewing him. He drives in his hybrid car, this tiny, cheap car to the supermarket, and he’s buying fish and ice cream to make us dinner. Then, we’re in his apartment making dinner. Then, literally his wife who runs one of the businesses that Markel, we sit down at the table together, and they hold your hands to say grace.
There’s something wonderfully intimate about it with I’m actually trying to get it not only inside the minds of these great investors, but inside their lives and give a sense of the consistency that runs through all of their ways of operating. For someone like Tom, who’s really– he’s a very, very decent, grounded, modest human being. He’s someone who really wants to create an iconic emblematic organization that people can look to and think, “Well, this is a noble and well-run place.” When I asked him how he was dealing with COVID, one of the things that he was doing was he said, “Well, I have to go in every day to headquarters. I’m very careful about it. There are only about 10 of us. How can I ask the people working for our company who are at risk?
How can I ask them to put themselves at risk, and I quietly hide away at home?” That was really interesting for me to see the modesty of this guy at home who’s still married to the woman he’s been dating since he was 15 years old, since they went to a custard stand on their first date driven by his parents. There’s just something really understated about him.
When you look at his very rational, reasonable, calm way of approaching investing, it’s very consistent with that very stable, steady, constant, understated approach to life. I think that’s part of what I’m trying to do is show that there’s a real consistency between the way people operate in one area of life and the way they operate in markets.
Good Interviewers Are Not Judgmental
Tobias: To be a good investor, I think that you need to be a reasonable student of humans, of humanity. I think that to be a good writer, you need a very similar skill. You need to understand motivation and various other things like that. It sounds like you spent a lot of time with them to get this appreciation. Where did you learn your process? Where does that process come from?
William: It’s very intuitive, because people can tell you– I did go to Columbia Journalism School, which is supposed to be the best journalism school in the world. I sometimes think that my professors would be horrified by the way that I do things. For one thing, I don’t really fully buy into the myth of objectivity, which is something that a lot of journalists swear by, and I–
Tobias: What is that?
William: Well, there was always this idea that you wanted to present both sides of the story. You wanted to be extremely balanced. I’m trying to do something different. I’m trying to be very truthful, I’m trying to make things very factually accurate. But I’m actually trying to get so deeply inside the mind of someone that I’m writing about, that I’m explaining this is how they see the world, and this is what we can learn from the way they see the world. I think, by nature, I’m somewhat empathetic.
When I’m with someone, and I’m interviewing them deeply, and I’m asking them about the hardest periods in their life–for example, I’m asking Tom Gayner about what it was when he lost all of his hedge during the financial crisis, or asking Howard Marks about his divorce or asking Bill Miller about what it was like when he put on 40 pounds during the financial crisis and 100 people got laid off because of a mistake that he’d made. That’s a very intimate thing.
One reason why I can go into that area with these people, is I’m not very judgmental. I’m very empathetic and I’m pretty open about the fact that I’ve screwed up in all sorts of ways in my life, and that I’m wrestling with different setbacks and mistakes that I’ve made. I’m trying to figure out how do you bounce back from failure? How do you bounce back when you feel that you’re publicly shamed? Or, that you screwed up? Or, that you’ve let people down? How do you deal with it? That’s a very different thing than writing for The New York Times, and giving the sense of, “Well, on the other hand, this person says this.” I’m not really that interesting. I’ll talk to lots of other people, but I’m aiming for a kind of deep truth that that’s very enigmatic, and you don’t truly know, you never really know whether you’ve got it right or not.
I’ve made enough mistakes over the years, that it keeps you humble, because you know that you can screw up. I used to have this slight attack dog approach to journalism. I once wrote a story for a magazine, about the guys from the Kaufmann Fund, for example. I was holding them up as poster boys for everything that was wrong with the mutual fund business. I was saying, here are these guys, who underperformed the market by 50 percentage points over the last three years. This is many years ago, and yet they made $60 million in fees.
I had a little bit of a gotcha attitude of a young, feisty man wanting to get even with the world and show them how smart I was. I think as I grow older– I’m very old man, I’m 52 now. As I grow older, I think I’m more empathetic, more curious about why people think the way they do and how they deal with their own vulnerabilities. That, I think, is very different from a traditional cold, detached journalistic approach, which clearly has its virtues, but it’s just not the game I’m playing at this point.
Tobias: How do you come–
William: It’s a very long-winded answer, sorry.
Tobias: No, this is a podcast. The longer your answers, the fewer questions I have to ask.
William: Very good.
Bill Miller: Stoic Investing Comeback
Tobias: Please expand as much as you would like to. How do you come back from a catastrophe or from a catastrophic loss?
William: Well, I write in the epilogue of the book about what the money does for you. It’s a chapter called Beyond Rich, and I talk about, “Well, yeah, the money is all great, but unless you have equanimity, unless you have resilience, you’re toast,” and so you have to really work on your inner life. I looked at a few characters in that epilogue, who I find very helpful and instructive in my own life.
I think Bill Miller is one of the most interesting, he’s someone I’ve interviewed, I think, for the best part of 100 hours over the last 20 years. I spent an enormous time with Bill, I wrote a very long profile of him for Fortune about 20 years ago at the peak of him beating the market for 15 years running, and then, I would write about him during the financial crisis, and then I came back after the financial crisis when he was incredibly bruised, and everything had gone wrong.
There was a year where I think he lost like 65% in his smaller fund. His assets under management went down from something like $77 billion to $800 million. Then over the last couple of years, I’ve spent a lot of time with him. I went and spent two days with him in Maryland, and then talk to him again a couple of weeks ago.
One of the things that’s been really wonderful has been to see him recovering from the nightmare of the financial crisis. Partly what Bill did that I think is very instructive, is he was always obsessed with stoic philosophy. He had studied philosophy in college as a postgrad. He uses philosophy for everything. Many years ago, when he was buying the biggest position in Amazon of any fund manager, it was based on it, to some degree, what he’d learned from Wittgenstein and Henry James without misperception how everyone was misperceiving things.
This time during the financial crisis, he was again drawing on philosophy. He was saying, “Well, the stoics like Epictetus and Marcus Aurelius, they’re really focusing on differentiating between what you can and can’t control. I can’t control my reputation. I can’t control the fact that people are badmouthing me.” He showed me this tweet at one point where I think he’d had– his extraordinary recovery of the last decade that had already begun. He showed me this tweet where someone had said something, like, “That, asshat, Bill Miller, just got lucky again.” He’s like, “Wow, asshat, Bill Miller, that’s pretty harsh.”
It’s not like he’s not hurt when people are mocking him and deriding him as being an idiot, but he was able to say, “Well, I can’t really control that, but I can control the fact that my process is really good, that my principles of investing of buying things cheap are really good. Over 20 or so years, I’ve proven that I can tell the difference between what’s cheap and what’s expensive.
So, let me just keep doing that. I’m not trying to vindicate my reputation, let me try to get back the money that I lost for people.” He read Jim Stockdale’s extraordinary book at the time, which is this book about Stockdale being, I guess, tortured multiple times in the Hanoi Hilton. Stockdale who is a remarkable guy who had been studying Epictetus and the stoics, while he was at Stanford, later in his career. He was ejecting from his plane that was shot down over Vietnam, said something to himself, like, “I’m leaving the world of technology and entering the world of Epictetus.”
He, again, was actually applying these principles from philosophy, where one of the great ideas that you get from stoicism is that you can’t control your external circumstances, but you can control aspects of your behavior, like trying to be a virtuous person. Just trying to behave with honor for Bill Miller became a very important guiding point to say, “Well, let me be honest about my mistakes. Let me have a sense of humor. Let me not take myself too seriously. Let me learn from the mistakes. I’m going to be a little more diversified than I was. I’m going to take a little bit more caution, because I need to accept the fact that I didn’t realize how catastrophically wrong I could be. At a certain point when everyone tells you for so many years, how smart you are, and you just are right, right, right, the whole time, at a certain point that seeps in.”
There was an extraordinary moment where I said to him, when you look back– and I’ve been through the wars myself. I’ve been running the European Middle Eastern African edition of Time Magazine, when I was fairly young and felt like this high-flying guy and then I got laid off during the financial crisis. I had been very bruised, but then it turned out to be this enormous blessing, I mean it set me on a different path that’s been really wonderful.
I was saying to him, “Do you feel in some way, the pain and disgrace of the financial crisis has been a gift to you?” He said, “Yeah, it’s been very cathartic. It’s been very cleansing for the ego. One of the things that happens is when you’re really successful, everyone’s always getting you on things like CNBC and stuff to pontificate about things that you don’t even necessarily know about. When you’ve made a fool of yourself and you’re wrong about the market in such a catastrophic way, nobody wants to hear from you. That’s a really wonderful thing for your ego.”
There was something for me very moving about the fact that I’d seen Bill through 20 years of ups and downs, and I could see him putting his life back together. It gave me real joy. We were at his house, which is a wonderful house, with the most astonishing book collection you’ve ever seen. We’re walking into his garden, because he wanted to show me this sculpture, that was basically where he’s going to be buried at. He said, “This is where my ashes are going to be scattered.” He’s already thinking of his own impermanence. He’s just like, “Yeah, this is all just go poof. It’ll all just float away.” We’re walking into his garden, and I said, “It’s really amazing. You’ve actually put back your life
together in a way that’s totally true to who you are, you’re totally unconstrained and free to be Bill Miller. You don’t have a board that’s bossing you around or overseeing you.” He loved Legg Mason, but he definitely had a lot of oversight there. “You don’t have vulnerability to your shareholders yanking their money out any day. You have control of your time, you have control over your money, you’re working with your son, you’ve just got this small team. There’s something wonderful, it’s like you’re unconstrained.” He was like, “Yeah, it’s the best.”
For me, to see Bill go through all of these wars, and put his life back together in this really honorable, strong, noble way was a tremendous treat. I used to have enormous, enormous admiration for Bill’s wild intellect, the fact that he just has this thrilling mind. What I realized over the years is actually the thing I respect most about Bill is his indomitability, that he survived that tremendous fire, and came back and put his life back together in a way that’s really in alignment with who he is in the deepest sense.
Sir John Templeton: Mastering The Inner Game
Tobias: You’ve been conducting these interviews– it says on the book you’ve been conducting the— in the overview that I got, you’ve been conducting these interviews with some of these folks for sort of 25 years, and I noticed one name in here that I thought was very interesting. You’ve had a discussion with Sir John Templeton, so how was the discussion with– What did Sir John have to offer?
William: Yeah, that was a fascinating experience. I feel like I’ve been wrestling with the memory of Sir John for 20 odd years, because I don’t feel like I got that right when I first wrote about him. I went to the Bahamas 20 or so years ago, when he was just about to turn 86, I think. For me, this was the consummate magazine journalism story. I’m going off to this beautiful place, it’s really sunny, the middle of a shitty New York winter/late fall. I got to stay in this beautiful hotel and go interview this iconic guy.
I think maybe I had slightly conned him into thinking that I really just wanted to write about the fact that he was at that point, obsessed with his whole spiritual research campaign. He was talking about how his goal really wish to increase spiritual information a hundredfold. I, in the way that cunning journalists would said, “Yeah, I really want to write about what you’re doing these days with all of this spiritual stuff, but really, I wanted to figure out, ‘oh, here’s this fascinating guy who was like one of the greatest investors of all time,’ and what can I learn from him about how to invest and how to get rich?”
We spent much of a day together. I was very struck by the difference between his image as this saintly figure, this grand old man who is super courtly, he had this wonderfully courtly charming manner, but then this reality that I saw this other side of his personality was very, very tough, and slightly sanctimonious, and pious and judgmental, and I was a bit of a mess, and in my mind was all over the place, and here’s this guy who won’t even allow himself a negative or unproductive thought, and he was so disciplined that he would say things.
One guy I interviewed about him said to me that when he first met Sir John, Sir John said to him, “Meet me at 4:02, I have another meeting at 4:13.” He was a billionaire who would take scraps of paper and staple them together to write on. While I was interviewing him, he didn’t want to waste any time. There was a point where I’m asking him questions, and he’s literally underlining a book for me at the same time.
There was something kind of intimidating about him, and slightly cold and slightly threatening to me, even though he was very quirky and charming. What I guess I realized many years later, when I was writing this book, is that he had mastered this inner game, he had mastered his own mind and his time and his energy to an extraordinary degree, and I had been too naive to see it and I think too much of a mess myself, too disorganized and scatterbrained and late for everything and chaotic, to appreciate just how profoundly powerful it was to have those characteristics.
He had been on a holiday very, very early in his life with his first wife, who had died on him on a motorcycle, leaving him with three young children to raise. One of the reasons he was able to survive and thrive was, because he had this extraordinary control of his own mind. You saw it also with investing. I write at great length about what I regard as the great bet of the 20th century where he made this astonishing contrarian bet, as the world is falling apart during World War II, and quintupled his money at a point where it just seemed insane for anybody to invest. It seemed like an inappropriate investment to insurance companies, for example, to buy stocks. Here you have this young guy buying 104 stocks all priced at less than $1, as Germany had just invaded France and Poland, and the world is falling apart.
I asked, “Has your faith really helped you as an investor?” He said, “Yeah, I never was depressed or despairing ever once.” As I say in that section about him, he never forgot that the sun also rises. It’s a really powerful lesson for a period like this, where people have been having a terrible time during COVID, obviously. What someone like Sir John just says, “Yeah, but the sun also rises, you survive these catastrophic periods, and then things improve.” I think in some ways, I was too naive and too judgmental to understand what made him extraordinary. There’s a thing in the notes on additional resources, which is a very quirky section that I’ve added to the book on things that people should read, where I talk about reading books of Sir John’s a couple of years ago, and literally groaning out loud and blushing, feeling myself blush, and just saying, “Oh,” and realizing that there were things he was trying to teach me 20 years ago that I was too stupid and too opinionated to listen to.
For me, one of the great lessons of writing about Sir John, has just been to try to keep an open mind. Here was a guy who was willing to fund research at places like Harvard into whether prayer worked. He would say, “Well, the sort of questions I’m exploring, does the person need to be putting their hands on the person they’re praying for? Do they need to be with them? Do they need to say, ‘Thy, will be done’? Or, do they need to do, is it better for the person who’s sick to do the praying?” I was a smart-alecky than probably agnostic or atheistic guy. Actually, the joke is now I’m much more spiritual, he would approve of the direction in which my life has gone. I just rolled my eyes at things like that. I thought, “He’s this kind of nutcase.”
William: At one point I said to him, “Do people ever say you’re a kook?” He’s like, “Yes, but I was always confident enough not to care what people thought.” I did understand that that was part of his extraordinary power as an investor, was the fact that he just didn’t give a damn what anybody thought of him. That has clearly turned out to be one of the key characteristics of all of the great investors that I’ve written about. This ability to go their own way, and not really care how other people judge them. I didn’t understand the second great lesson that, you need to master this inner game, this inner landscape of your thoughts and emotions, because for one thing, markets are so tumultuous that if you don’t gain control over that stuff, sooner or later, you’re going to come on undone.
Laura Garrett: Frontier Warrior
Tobias: We’ve discussed a number of men, but Laura Garrett, that’s a name that perhaps folks may not be as familiar with, who is Laura, and what are her lessons?
William: Laura is really fascinating. She’s a very unlikely character in a business that’s really dominated by alpha males. She comes from a really rural area of Kansas, and was the daughter of an academic. There are members of her family who I think would have factory workers and farmers. For a really modest background, and she’s this diminutive, soft-spoken woman. What I came to appreciate among other things about her, is that she’s an absolute warrior.
The toughness and ingenuity and talent that she’s had apply to get to where is astonishing. She runs these international and frontier funds, where basically, she’s going to countries that most people can’t stand. They’re massively out of favor. Turkey at a time when, it’s just had a coup failure, and judges have been thrown in jail, and soldiers have been thrown in jail, and journalists have been thrown in jail. She’s going there, and looking to pick up the two or three best companies in the country, the best companies at the worst possible time. She’s just very patient.
She’s obsessed with Templeton, and she said to me that the capital back Templeton is her favorite chapter in the book, because I gave her an advance copy. She is very risk averse, but she’s operating in these countries that are pretty risky. She tends to be buying companies that have so much cash that they’re just going to survive. She’s traveled to, I think, 75 countries. Part of what I thought was fascinating about Laura is that she’s a true intellectual. She’s just an intellectual seeker, she’s incorrigible. Every trip she goes on, she reads multiple books before she goes there. She’ll go station herself in a country for weeks or months on end. She bought a home in Kyoto in Japan, and just went and lived in Japan. Remarkable explorer.
She’s gaining an informational edge by understanding the culture of these different places. She speaks fluent Japanese, deeply immersed in the culture, understands, for example, the fact that they have a totally different attitude toward shareholders. She said to me that in terms of the hierarchy of things that they care about there, the shareholder is kind of lost. They care about the community, they care about their business partners, their employees, their customers. The last group that they’re serving were the shareholders. She said also they have this tremendous respect for the permanence and deferred gratification. They’re actually trying to survive. There are these companies in Japan that have existed for centuries.
When a Westerner comes in and pressures a Japanese company to juice up its returns in the short term, she’s like, “They just don’t understand the culture.” I thought that was really fascinating that you have this deeply cerebral person from totally surprising, offbeat culture, who’s just obsessed with learning about businesses and learning about different countries. Part of what was fascinating to me was the sacrifice that she made to do this. She has a husband who she loves dearly, who frequently will be living in Kyoto while she’s living in Utah, so spend months of the year apart. They didn’t have kids, because she said when she was starting out in the profession, it’s just so clear that to keep up with the men that she was competing with, she just would have to work all of the time. Then she said by the time she was ready, it got away from her and her husband had decided, “Well, maybe it’s just too late, and we don’t want to do that.”
Francois Rochon: The Best Investors Lack The Tribal Gene
I could see the personal cost, but at the same time, the intensity and the drive and the fascination with businesses and countries. I find her a deeply admirable and fascinating character. Like many of these people in the book, totally self-invented, someone who’s just created their own path. Maybe that was one reason why all of these people I’m writing about appeal to me is, so that people who are very free thinkers. François Rochon, who I write about briefly, said to me that he thinks all of the best investors have a non-tribal gene, they’re lacking the tribal gene. They don’t need to stay inside the herd.
He’s an art collector. He said that he thinks artists and writers also tend to lack that tribal gene, and I clearly lack that the tribal gene. I find that when I invest as well that I’m much happier when the markets going down, I can buy when things are out of it. There’s a calm that descends then. Whereas when everything’s going well, I just feel it’s all going to fall apart. Disaster is coming. I do think there’s something deeply nontribal about all of these people, whether it’s Laurie Garrett, or Charlie Munger, or Ed Thorpe, or Templeton. They’re truly thinking for themselves.
Jean-Marie Eveillard: Avoiding The 3 Great Financial Catastrophies
Tobias: You have a section on Jean-Marie Eveillard, the French value investor. What’s a distinction between Jean-Marie and perhaps the English speaking or British or American investors, what stands out as being something that he does distinctly differently?
William: Jean-Marie lived in New York and still, I think, lives in New York, so he’s very immersed in American culture. One of the things I would say about Jean-Marie that’s very distinctive, is just that he has this sense that life is difficult, and it’s full of unexpected occurrences and misfortune. He grew up in France, I guess, around 1945, I think he was born. He was growing up in a France had been devastated by the war. He talked to me about going to his grandmother’s church in the countryside in France when he was a little boy, and the priest saying, “You shouldn’t expect life to be good life. Life is all about suffering. This is not a bed of roses, and things will only be good when you die, and you go to heaven.” Jean-Marie grew up with a slightly mournful, melancholy attitude about the likelihood of suffering and pain that I think in some strange way, prepared him extraordinarily well to be a very conservative global investor.
He just always had this cautious respect for uncertainty. He had these extraordinary returns over decades, but when you look back at the reason he did so well, he basically explained that it was because he avoided three catastrophes. It was basically the catastrophe of the Japanese market blowing up in the late 80s. He pulled out of Japan entirely in 1988 when he couldn’t find a single stock cheap enough to buy.
I think at the peak of the Japanese bubble– Japanese stock is something like 45% of the market value of global stocks. Japanese stocks were worth more than the UK and the US stocks combined. Here, you have a global fund manager who says, “No, I can’t find a single company to buy in Japan.” Then, he did the same thing during the dotcom bubble, where he almost destroyed his career because he refused to buy any of those tech stocks or internet stocks. In around 2007, shortly before he retired, he didn’t own any of the financial stocks, because he couldn’t find anything cheap enough.
This risk aversion, this sense of life is not a bed of roses, and there are these terrible things that can happen served him very well, because it enabled him to avoid these three great catastrophes. One of the things that was interesting about Jean-Marie, it was clear that this career had taken a psychological toll. It was hard, particularly during the tech bubble, the dotcom bubble. He almost blew up his entire career by doing the right thing, by not getting sucked into this bubble. People were mocking him, even the directors at his own fund were deriding him. He told me that one day, he was told that one of the people at his company said, “Well, Jean-Marie is half senile anyway.” He said, “I was 59.” He said, “I went home, and I told my wife, who’s this battle-hardened investment banker. ‘They said I’m half senile.’ She didn’t even raise her eye from the newspaper, and just said, ‘Only half?’”
You saw this guy who had done everything right, who had been so cautious and so prudent with his shareholders money, a real custodian, and it almost wrecked him. His fund was sold. The fund business was sold from out under him, for something like 5% of what it would ultimately be worth. Much like Bill Miller, he was redeemed in the end.
He ended up being hailed as Morningstar’s Manager of the Year, and I think he got their inaugural Lifetime Achievement Award. It was fascinating to me to see this guy who’d really been through the wringer to get that. Even when I said to him, “Was it difficult to balance your career and your family?” He said, “Yeah, I neglected my daughters. I really regret it.” I said, “Do you think you could have been a successful stock picker as you were, and a good father?” He said, “I don’t know. As the preacher at my grandmother’s church said, ‘Life is not simple.’”
Great Investing Requires Great Sacrifice
I think one of the things that I’m trying to convey is that to be extraordinary at anything, requires some sacrifice, and also probably requires some quirks in your wiring and your temperament. These are literally extraordinary people because to beat the market over many years, you have to divert from the crowd and that requires you to be a little bit strange, very independent, temperamentally probably different than most people.
Arnold Van Den Berg: Incredible Investor, Extraordinary Human Being
Tobias: The final name that I’d like to discuss is Arnold Van Den Berg. I only recently learned of his story in the last 12 months or so. I think he gave an interview. He’s a Holocaust survivor. Can you tell his story?
Tobias: Yeah, Arnold is absolutely extraordinary. Wonderful human being, and I end the book with him. I explain in the book why I regard him in some ways as the single greatest role model of anyone I’ve interviewed in the investment world. The way I think of it myself is that he may not be the most successful investor of all, but he’s the most successful human being in the investment business in many ways. Part of what’s so fascinating about Arnold’s story is that he was dealt the worst hand you could possibly be dealt.
If we go back to Ed Thorpe, Ed Thorpe basically says, “Well, look, you’re dealt a particular set of cards in life, and then your choices influence whether you win or not. You have control over how well you play those cards, whether it’s with your health or your investing or anything.” Arnold was dealt the worst hand of all of these people. He was born on the same street as Anne Frank, a Jewish kid in 1939, as the Nazis are invading the Netherlands, and so he spent the first part of his life in hiding with his parents and his brother behind basically a fake wall in some Christian friend’s house in Amsterdam.
Then, at a certain point, his parents realized, “Well, this is a terrible bet that if the Nazis come in to search the house,” and Arnold who I think was about two at the time, “If he cries, they’re going to take everyone away,” and the first people who would be killed in Auschwitz were basically the children and the women. They decided that they would try to get Arnold and his brother, Sigmund, smuggled out of Amsterdam into a farm or an orphanage in Arnold’s case, a farm in Sigmund’s case in the countryside. This approximately 17-year-old girl from a Christian family smuggles Arnold across through all of these checkpoints into the countryside past, a group of SS officers at the train station in the countryside where she arrives, risking her life to save this two-year-old kid who she’d never met, and whose family she didn’t know. It’s an astonishing thing.
Part of what I do in the book is, literally I’m naming these people because I feel they should be remembered. He wondered for many years, “Why did this girl save my life?” He had terrible years, and his wife left him, his first wife. He has a very happy second marriage. His first wife left him for another man. He was in therapy for years, so the shrink who had a huge impact on him, he said to the shrink, “I don’t understand why that girl saved my life?” The shrink said to him, “Well, it’s simple.” He said, “Really? What do you mean it’s simple?” He said, “For some people, their principles are more important than their life, and for other people their life is more important than their principles.” Arnold really took this to heart and decided, “Well, I’m going to live a life based on my principles, and I’m going to try to be worthy of the people who saved my life.”
Here’s a guy, he barely made it through high school. He was very malnourished from growing up in this orphanage during the Holocaust. He lived in a really rough neighborhood in East LA after– I mean, his parents had been in Auschwitz and they survived, and they moved to East LA, where he would get beaten up the whole time. He didn’t think he was very bright. He had no financial training, then discovers Ben Graham when he’s 30 or something, and sets up a fund at the age of 35 with no education, no skills, no track record, no clients, no office, nothing, and just is maniacally focused and again, like Templeton, got control of his mind and his thoughts.
He was full of rage in the early days against the Nazis and against his parents, against the anti-Semites who would beat him up as he went home from school. He learned to hypnotize himself, and literally he would have these affirmations whole time, he would say things like, “No, I am a loving person,” over and over again. To an extraordinary degree, he really took control of his inner landscape, and he became this extraordinary, very loving, very kind, very decent human being.
He’s 81 now. He had an extraordinary stretch for about 38 years where he beat the market by an absolute mile. It’s a tough time in the last few years, because he’s very contrarian and he’s been betting on areas like oil at a time when nobody wanted to own oil stocks. I think, again, he’ll do fine in the end, but it’s been a tough period. He, for me, is just an extraordinary role model in so many ways. I talked to him yesterday, just by chance. He said to me, very quietly, I talk to him a lot, and he said to me, “William, I don’t really understand why you said you would pick me as such a great role model.”
I said to him, “Arnold, you’re the most giving and sharing and kind person of any of these people I’ve written about it. It’s an unbelievable thing. Seeing how much joy you get out of sharing with people and helping people.” Literally, I look out of my window, and there’s a trampoline outside that he gave me because he was worried that I was so slothful, and the next-door neighbor’s kids are like jumping on this trampoline of his. Everywhere you look there, you find people who have been sent books by Arnold, he’s just very loving guy.
He told me this wonderful story where he said, he said he has this childhood friend was at high school with him who leaped to his defense in a fight. Arnold became a very tough warrior who sort of stood up for himself and learned to box at a certain point, and then became a champion rope climber, which in those days, was an Olympic sport. He became tough.
He said he was in this fight very early on, and there was a kid at his school who said to him, “Well, I’ll come help you.” He and these three other kids who were all from very tough, very violent homes, and they were all beaten up, I think, by their parents, all remained really close even into their 80s. He tells me this story about this friend, and he says, “I remember when we were really young, and he’d saved up for years and he bought this beautiful car. He was so proud of it, just this gorgeous car, and then one night, he gets in a crash. He calls me, he’s just devastated. I go over to his house, and I said, ‘Don’t worry, Willie, this isn’t so bad. I think we can repair this.’” Willie says, “You think so, Arnold? I don’t see– Look, it’s just wrecked.” He’s like, “No, Willie, we’re going to go to the scrapyard, and we’re going to get a new fender and a new this and new that.”
“We went to the scrap yard, we got all this stuff, and we spent ages and we fixed up his car, and spray painted and everything. He was so happy. I’ve had that photo of him looking that happy with his car in my office, ever since then, all these years.” Probably, I don’t know is this 50-55 years later, he still has that. He said, “I got as much joy out of that as anything I could have done for myself.” That’s just a beautiful story that he told me yesterday, such quintessential Arnold, where you just see that– he’ll say the things that he said, “I thank God every day that I got this money, because it just gives me such joy to be able to help other people. It doesn’t affect me that much. It’s not like it changes the way I eat or anything.” He’s basically a vegan who eats these appalling celery and beetroot kind of juices all day long. He’s not exactly spending a fortune on himself, and he lives in a really modest home. He’s just a really modest, decent guy.
For me, Arnold is not just a really smart investor, but he’s just such a consummate human being. When you see someone like that, and you see the joy that this guy gets out of just being a mensh, just being decent and loving and kind, it has a real impact on you. Part of what I tried to do in the book is say, “Yeah, you want to make money, you want to have financial security, you want to be financially independent, you want to be able to take care of your family, send your kids to whatever college they want to go to,” or whatever. Not have the pain and fear of not being able to take care of yourself, and you want to have a cushion, but you really don’t want to lose sight of what the money is for. You don’t want to worship it and you don’t want to worship external success and measures of your own wealth and brilliance.
There’s something lovely about the fact that Arnold, this guy who doesn’t have a yacht, who doesn’t have a plane, and really only– he didn’t even want to get a nice car, he drove the cheapest car. Then, his wife really wanted to get him a car. He said, “I saw how much pleasure she got out of me having this car. Initially, I was really embarrassed to drive it, but after a while, I got used to it.” When you see someone like that, it just makes you realize that there’s a worldly wisdom to the best of the people in this book that’s very different from just the ability to make money. One of the things I hope that people get from the book is it helps them to invest better, it helps them to achieve that financial independence, but they also look at some of these extraordinary characters like Tom Gayner, or Arnold Van Den Berg or Nick Sleep or Ed Thorpe. There’s deep wisdom in the way these people have lived their lives. It’s not that they’re perfect individuals, but there are aspects of them that I really tend to use a phrase from Mohnish Pabrai that I really want to clone because it’ll help me to stack the odds in my favor in life.
Tobias: William, absolutely fascinating discussion. I thoroughly enjoyed it. Unfortunately, we’re running out of time. If folks want to get in touch with or follow along with what you’re doing, what’s the best way to do that?
William: Well, I’m on Twitter @williamgreen72. I’m on LinkedIn, if you figure out how to email me, you’re welcome to email me. I spend ridiculous amounts of time replying to people’s messages, because it’s lovely when I hear from people who are actually affected by different things in the book and by things I’ve talked about. It’s an ongoing conversation. I’m learning about this stuff and I’m trying to figure out how to become richer, wiser, and happier. If your listeners hear stuff or read stuff or meet people that they think I should be interviewing and learning more about and sharing their ideas, please let me know. I really hope it’s an ongoing conversation.
Tobias: There’s some profound wisdom in the book. The book’s called Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life by William Green. We’ll link it up in the show notes. William, thank you so much for your time.
William: Thank you. It’s been a delight talking with you.[outro]
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